Investors selling up as government threats push them out

Sep 2023Karen Millers

The Property Investor Sentiment Survey by the Property Investment Professionals of Australia (PIPA) found that last year 19.2 per cent of investors were considering selling in 2023, with 12.1 per cent now having followed through with that intention, offloading one or more of their investment properties.

Queensland and Victoria have faired the worst, with 24.8 per cent of investors selling one or more properties in Melbourne over the past year, while 23.3 per cent have sold in Brisbane. 

In regional Queensland, 16.4 per cent of investors sold, while in regional Victoria that figure is and 6.4 per cent.

At a statewide level, 39.8 per cent of investors sold one or more properties in Queensland over the past year, while 31.35 per cent sold in Victoria – dwarfing the results in all other jurisdictions.

Across NSW, 20 per cent of investors sold, compared to nine per cent in WA and seven per cent in the ACT.

PIPA Chairwoman Nicola McDougall said like much of the country, Victoria and Queensland were in the grips of a rental crisis driven by a drastic undersupply of homes and significant demand from tenants.  

“Those states are leading the charge with restrictive, unfair and inefficient legislative reforms that adversely impact property investors,” Ms McDougall said.

“Ranked from one to eight, one being the most accommodating and eight being the least, 57.4 per cent scored Victoria an eight and 23.5 per cent scored Queensland a seven,” she said.

“When asked to rank the states least accommodating of property investors, a staggering 57.4 per cent nominated Victoria.”

Source: PIPA

According to the survey, 47 per cent of respondents said governments increasing or threatening to increase taxes, duties, and levies, were the main reason they wanted to sell.

In addition, 43 per cent of respondents said changing tenancy legislation impacted their control and increased their compliance and holding costs. 

Both reasons outranked rapidly rising interest rates (40.1 per cent) as a main pressure point, along with the threat of rental freezes (34.6 per cent), a need to reduce total borrowings (33.1 per cent) and positive selling market conditions (29.2 per cent).

Ms McDougall said it was clear investors were selling or avoiding buying due to attacks from governments disguised as reforms.  

“At a time when tenants can least afford it, the people providing the vast majority of rental homes are selling up in droves,” she said.  

“Of those investors who sold an asset in the past year, 12.9 per cent believe they will never purchase an investment property again. 

“And unfortunately, in another sign of more rental stress to come for tenants, the survey found 38 per cent of investors say it is likely they will sell within the next 12 months – up significantly from 19 per cent in last year’s survey.”

The potential for further interest rate increases is also a cause of concern. 

When asked at what point they might need to exit the market for financial reasons, 19 per cent of respondents nominated a further cash rate increase, totalling one percentage point, while 11.2 per cent said a 50 basis point hike would be a trigger. 

However, in positive news, 56 per cent of investors believe that now is a good time to invest in residential property, but this is down slightly from 58 per cent in 2022, and down significantly from the 62 per cent recorded in 2021.

Originally Published: Rowan Crosby | Elite Agent | 13 September 2023

https://eliteagent.com/investors-selling-up-as-government-threats-push-them-out/

We strive to bring accountability, ethics, and education to the property investment industry.

PIPA exists to improve the professional standards of anyone providing property investment advice to consumers. Our voluntary Code of Conduct means that members adhere to a high set of professional standards to help protect consumers. Qualified Property Investment Advisers (QPIAs®) have the highest form of industry-recognised, specialist training and can be trusted to provide tailored and unbiased advice to consumers.

PIPA also regularly produces research, analysis, and publications to help educate our members, media, and consumers about the property investment sector.

By signing up for our newsletter, you will gain access to two of our most valued resources – the Annual Investor Sentiment Survey report and the quarterly PIPA Adviser e-magazine.

2023 Investor Sentiment Survey

The Annual PIPA Investor Sentiment Survey is a rare snapshot of the buying intentions of property investors.

PIPA Adviser Magazine

The PIPA Adviser provides the latest research on market conditions, including forecasts for next year.